By Matt McCallNov 10, 2017
Earnings can be a volatile time for stocks as investors weigh their buy and sell options both leading up to and after the announcement. It’s also a time that highlights one of the greatest benefits ETFs have to offer – they almost entirely remove company-specific risk, including that surrounding quarterly results.
Of course, an ETF can still experience heightened volatility during the season, especially as a large move in one of its top holdings could affect near-term trading. At the same time, poor results from an industry leader could send an entire sector – and therefore, the ETF – lower.
The good news is that any pullback scenarios are nothing in comparison to owning an individual stock that gets pummeled after earnings. Because of this, I’m not typically a big buyer of stock and options directly ahead of their earnings reports. Unless there is a very compelling reason to do so, it makes more sense to keep them on our watch list and wait to see how the shares settle once the results are out in the open.
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